The Bangalore bench of the CESTAT, last week ruled that limitation cannot be invoked for denying refund of service tax paid by assessee by mistake under the provisions of Finance Act, 1994.
Assessee, M/s. Cannanore Handloom Exports is engaged in the manufacture and export of fabrics and also having service tax registration. They paid service tax under the head “Business Auxiliary Services” in respect of services rendered by their overseas agent. Originally, the liability for paying service tax is on the recipient of the service in India as per Rule 2(l)(d)(iv) of Service Tax Rules, 1994 read with explanation to Section 65(105).
After realizing the mistake, assessee claimed refund of tax paid by it. Initially, refund claim which was allowed by the order-in-original. However, the first appellate authority denied the same on departmental appeal by holding that the claim was bared by limitation.
Before the Tribunal, the assessee contended that as payment of service tax was a mistake, the period of limitation would not apply in such cases. They cited a catena of decisions in support of their claim.
They also relied on the Supreme Court decision in the case of Asst. Collector Vs. Anam Electrical Manufacturing wherein it was held that statutory time limit is applicable to claim for refund of even illegal levies and time limit cannot be extended by any authority.
Allowing the appeal, the bench held that the order is not sustainable.
Read the full text of the Order below.
